‘Bank of mum’ most generous when lending cash to family, survey finds

The “bank of mum” is the most generous family member when giving financial support to relatives, a survey suggests.

More than half (55%) of people questioned said they have previously borrowed more than £100 from a family member.

Those in need of cash may have most luck asking mum as more than two-fifths (42%) of these loans were found to be from mothers.

Fathers were ranked the second most generous in the survey, accounting for a third (32%) of loans handed out within families, the survey from MoneySuperMarket found.

However, those dishing out loans to loved ones can expect to wait nearly a year typically to get their money back.

On average, borrowers take 11 months to pay back a family member, with 25 to 34-year-olds taking the least amount of time at 10 months. Those aged 35 to 44 take the longest, at 13 months, the research found.

While 62% of people said their family loan had been a “one off”, 6% said they rely heavily on their relatives for cash and borrow from them at least once a month.

People aged 35 to 44 were most likely to have borrowed from family members, with 61% saying they have done so, the survey of 2,000 people across the UK found.

Over-55s were the least likely to have relied on a relative for cash, with 43% having previously borrowed over £100.

More than a fifth (22%) of those who had borrowed from relatives said the main reason was to buy a car, while the same percentage needed to resolve “urgent financial matters”.

Nearly a fifth (19%) needed money for a house deposit, and 15% used the cash to pay off a bill that was higher than they had anticipated.

When asked why they did not use a bank, nearly half (45%) said a relative offered them the money to avoid running up debts with a bank, while 41% said it was so they would not have to pay interest on a bank loan.

Rachel Wait, a consumer affairs spokeswoman at MoneySuperMarket, said: “It’s not hugely surprising that people are turning to those closest to them for help – whether it’s with paying for their first home or
paying off an unexpectedly high bill.

“Borrowing money from a family member is an option – but it doesn’t have to be your only option.

“There are plenty of ways to borrow responsibly and pay off what you owe at a manageable rate, such as a credit card with a 0% interest period – in some cases, this means you have two years or more to spread out your repayments.

“Certain current accounts also offer an interest or fee-free overdraft, which could be another option.”

She urged those in need of cash “not to panic” and rush into taking out credit with a high interest rate.

She said: “Consider your options carefully and if you do need to borrow money, having a plan in place will help ensure you stay on top of your repayments.”

Here is where family loans come from, according to the survey from MoneySuperMarket.

– Mothers, 42%
– Fathers, 32%
– Brothers, 6%
– In-laws, 6%
– Sisters, 5%
– Grandmothers, 2%
– Grandfathers, 1%
– Aunts, 1%
– Uncles, 1%
– Cousins, 1%.